The €14 billion vanishing act

Don’t ever believe the multinational companies based in Malta when they whine about their wage bills and the cost of labour and ‘productivity’. The huge amount of taxes they are legally evading on their huge profits are ample proof that they can well afford to pay workers good wages.

On top of that, corporate welfare schemes run by Malta Enterprise mean that multinationals get refunds on the costs of training of workers – including in-house training, research and development costs, and what not. They expect schools and education policy to turn students in docile workers and nothing else.

On the other hand, we are told that there is not enough money for public services, that new mass transportation systems are too expensive and that healthcare and pension costs are unsustainable. That student maintenance grants are a luxury students should be thankful for.

And these same multinationals, who pay next to nothing in taxes, through their representative organisations talk about competition, flexibility, reducing costs and reducing public spending. Obviously so long as their corporate welfare schemes, out of public money, are kept intact.

On a related issue, letterbox companies, with only an address in Malta, also pay next to nothing in taxes. They do not operate out of Malta, do not sell one single product or service out of Malta, but through creative accounting managed to steal, again legally, some €14 billion in evaded taxes between 2012 and 2015.

Malta’s presidency of the EU’s Council of Ministers brought these practices into the limelight. Some expressed surprise that other countries are fed up with this state of affairs. OffshoreLeaks, the LuxLeaks and the Panama Papers have shone a spotlight on this legal theft. Of course lawyer-politicians and hangers-on from the PN and PL are involved directly in these dealings. Apart from the theft called ‘tax avoidance’, when some of these ghost companies are accused of links with organised crime and the mafia the nominees in charge claim ignorance of the facts. Probably they really would not know anything: the system is a magnet for organized crime.

One thing is clear, if our country does not seek to redress this state of affairs in a fair and measured manner, others will decide for us. Public transparency is an important first step in the path for fairer taxation, but some EU member states keep on watering down this essential reform. The way we currently tax companies, treating subsidiaries of the same company as if they are completely independent entities, does not reflect the reality of their operations. A common and consolidated corporate tax base would be a crucial step towards ending tax avoidance by global corporations in Europe.

A minimum corporate tax rate across the European Union is controversial since it removes the decision of taxation levels from national policymakers and the flexibility which is sometimes required. Each country should be able to decide its own corporate tax rate for companies operating and making profits in that country.

However, playing around with accounts and companies sending their profits to a ‘ghost company’ to avoid paying their fair of taxes in the countries from which they operate has to stop, whether PL and PN like it or not.

Obviously, other countries will not sit back and let this go on. It’s the same argument that we make regarding secret accounts in Panama, which are set up to evade taxes in Malta. Maltese taxpayers and employees are rightfully angry that Keith, Konrad and Ninu were shown to have these types of accounts in Panama. There are other services which can be offered to replace these practices. Such reforms should be coupled with a stronger solidarity package with more EU funds invested in strengthening economies and public services especially in the smaller EU countries. The reforms should also be tied to Eastern European countries, with which the EU was so generous, accepting that as partners in the Union they have to share responsibility when it comes to migration and international crises such as the war in Syria.

Attard football club

The use of public land is frequently in the news. A case was brought to my attention by people close to the Attard Football Club. The club made a simple request way back in the nineties. The football pitch, part of the H’Attard Primary School, is an odd shape. All they requested is for one end of the pitch to be reconstructed so that it becomes rectangular.

The Education Division applied for development permits, on public land, and during one local council election campaign PN officials, MPs and candidates trumpeted the ‘imminent’ construction of a new ‘sports complex’, including tennis courts. The permit was granted in May 2000. January 2017, and the football pitch has remained an oddly shaped trapezoid.

When proposals for public land to be put to good use, and to improve facilities for the use of the community and the local state primary school things seem to stall. When public land, like the former Lowenbrau site, worth €8 million, is given away for peanuts, things move really fast.

Ralph Cassar is secretary-general of Alternattiva Demokratika and Attard local councillor